Average UK fixed mortgage rates climbed again on Tuesday as major UK lenders mortgage rate increases pushed the average two-year deal to 5.73% ahead of the Bank of England’s base rate decision later this week. Borrowers trying to remortgage now face higher pricing and fewer products, with the pressure most acute for households near the end of older fixed deals.
The average two-year fixed residential mortgage rate rose from 5.68% on Monday to 5.73%, while the average five-year fixed residential mortgage rate moved from 5.73% to 5.78%. Moneyfacts said the market also had 7,426 homeowner mortgage products on Tuesday, down from 7,458 on Monday, tightening choice at the same time rates moved higher.
Moneyfacts sees 5.73% and 5.78%
The two-year rate was at its highest level since May 28, and the five-year rate reached its highest level since April 12. Rachel Springall of said: “A second wave of mortgage rate hikes has begun from the major banks in reaction to growing concerns surrounding inflationary pressures.” She added that “it is highly likely other lenders will follow suit to adjust rates, and with some deals withdrawn from the market, it is expected any returning deals could well be priced higher.”
That leaves borrowers with less room to wait for a cheaper deal. Springall also said fixed mortgage rates are not intrinsically linked to adjustments to the Bank of England base rate, which sits at 3.75%, so a steady decision on Thursday would not automatically pull mortgage pricing lower.
7,426 products on Tuesday
The drop to 7,426 homeowner mortgage products shows the market is narrowing while pricing moves up. Moneyfacts said some lenders have made mortgage rate hikes twice in September, a sign that the repricing is not isolated to one brief move. For borrowers comparing deals, fewer products can mean less room to shop around before a rate is pulled or repriced.
Springall said: “The mortgage pain shows no sign of easing for those borrowers who cannot yet lock into a new deal, particularly those with a five-year fixed who are not due to refinance until 2027.” She also noted that “Back in February 2022, there were sub-2% fixed mortgages available, so moving off this rate will be a huge shock for borrowers.”
Ian Harris on repayments
Ian Harris of NAEA Propertymark said rising mortgage rates will be a concern for many homeowners and prospective buyers already navigating challenging affordability conditions. He said consumers are facing greater uncertainty over the cost of borrowing and what this means for their household finances, and warned that those coming to the end of historically low fixed-rate deals could face a significant increase in monthly repayments when they remortgage.
Harris told borrowers to engage with a qualified mortgage adviser and explore options as early as possible rather than waiting until an existing deal expires. With major banks already lifting rates and some deals withdrawn, the practical question for borrowers is whether the next available fix will cost more than the one they can still hold today.
